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The importance of social capital in Colombian rural agro-enterprises

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  • Johnson, Nancy
  • Suarez , Ruth
  • Lundy, Mark

Abstract

This paper characterizes and measures the contribution of social capital to the performance of 50 agroenterprises in Colombia. Using qualitative analysis we document how social capital performs a variety of functions in firms, including providing access information via networks of contacts, reducing transactions costs in contracting via trust, and sustaining capacity for collective action. To estimate social capital's contribution to firm structure and performance, quantitative indicators of firm-level use of social capital are developed based on the number and strength of relationships that firms maintain. Econometric analysis finds that firm-level returns to relationships are high, higher than to physical or human capital. The results suggests that while firms can increase their economic performance by investing in social capital, institutional and technological innovations that ameliorate the effects of the market failures that lead to use of social relationships for business purposes could also improve both equity and efficiency.

Suggested Citation

  • Johnson, Nancy & Suarez , Ruth & Lundy, Mark, 2002. "The importance of social capital in Colombian rural agro-enterprises," CAPRi working papers 26, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:worpps:26
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    References listed on IDEAS

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    6. Birner, Regina & Gunaweera, Hasantha, 2001. "Between market failure, policy failure and “community failure”: property rights, crop-livestock conflicts and the adoption of sustainable land use practices in the dry zone of Sri Lanka," CAPRi working papers 13, International Food Policy Research Institute (IFPRI).
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    Citations

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    Cited by:

    1. Ratner, B. D., 2013. "Addressing conflict through collective action in natural resource management: a synthesis of experience," IWMI Working Papers H046235, International Water Management Institute.
    2. Hans Westlund & Frane Adam, 2009. "Social Capital and Economic Performance: A Meta-analysis of 65 Studies," European Planning Studies, Taylor & Francis Journals, vol. 18(6), pages 893-919, November.
    3. Escobal, Javier & Torero, Maximo, 2006. "Access to dynamic markets for small commercial farmers: the case of potato production in the Peruvian Andes," MTID discussion papers 99, International Food Policy Research Institute (IFPRI).
    4. Pant, Dhruba, 2008. "Implications of bulk water transfer on local water management institutions: a case study of the Melamchi Water Supply Project in Nepal," IWMI Working Papers H041304, International Water Management Institute.
    5. Barham, James & Chitemi, Clarence, 2009. "Collective action initiatives to improve marketing performance: Lessons from farmer groups in Tanzania," Food Policy, Elsevier, vol. 34(1), pages 53-59, February.
    6. Kaganzi, Elly & Ferris, Shaun & Barham, James & Abenakyo, Annet & Sanginga, Pascal & Njuki, Jemimah, 2009. "Sustaining linkages to high value markets through collective action in Uganda," Food Policy, Elsevier, vol. 34(1), pages 23-30, February.
    7. Kruijssen, Froukje & Keizer, Menno & Giuliani, Alessandra, 2009. "Collective action for small-scale producers of agricultural biodiversity products," Food Policy, Elsevier, vol. 34(1), pages 46-52, February.
    8. Shiferaw, B., 2008. "Community watershed management in semi-arid India: the state of collective action and its effects on natural resources and rural livelihoods," IWMI Working Papers H043862, International Water Management Institute.

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